Wednesday, October 24, 2012

I mentioned
recently that I have a chapter in a new book on academic museums. One of
the most interesting chapters in the book is co-authored by the President of
Randolph College and Peter Dean, the Trustee who was most deeply involved in
the decision to sell
four paintings from the college’s collection. I believe that, aside
from a letter to the editor of Museum magazine a couple of years ago,
it’s the first time they have publicly discussed their decision-making
process. In an Art Law Blog first, I conducted the following Q+A with
Peter over the course of the last several days:

Q.
Let’s start at the beginning. Can you tell us what led the school to
decide to sell the paintings?

A.
To answer that, I need to provide some context.

Since its foundation in 1891,
Randolph-Macon Woman’s College had existed for the purpose of providing a
single-sex undergraduate education for women. By the first decade of this
century it was becoming increasingly difficult to attract sufficient numbers of
qualified young women with the ability to pay the tuition necessary to maintain
financial sustainability. Since the college’s operating costs went up
over time, as all such costs do, the operating deficit was increasing.
This deficit was covered to some extent by donations, but most significantly by
draws from the college’s endowment. By 2006 the amount of this annual
draw had increased to the point that it had become unsustainable.

In order to address this
problem, the first and most important decision was taken in 2006: the college
should become co-educational and admit male students. This occurred in
2007, when the college’s name was changed to Randolph College. However,
the board of trustees recognized that, even with the admission of men and the
implementation of cost reductions, the college would continue to incur a
substantial operating deficit until enrollment grew and tuition discounting
could be reduced. This meant that the excessive draw from the college’s
endowment would continue for several years because the absolute amount of funds
required would not be reduced. Since the amount of the draw was not going
to be reduced soon, the only way to make the draw sustainable (preferably at a
rate that is close to the recognized benchmark of 5%) was to increase the size
of the endowment.

The pressure to find a
solution was increased at the end of 2006 by the decision of the college’s
accreditation agency to place the college on warning because of its financial
condition.

One well-established way to
increase the endowment would have been to conduct a capital campaign
specifically for that purpose. However, that option was ruled out at that
time because the change to co-education as well as the inevitable change to the
college’s name had, predictably, resulted in many alumnae being disaffected and
the level of financial support from donations to decline, though they are now
climbing again. Recognizing the great difficulty of launching a successful
capital campaign the board concluded that the required capital infusion would
have to come from the sale of selected assets with the proceeds being placed in
the general endowment. No other group of assets represented anything like
the value of the college’s art collection so that became the focus of
attention, though it was hoped that a sufficient sum could be raised by a sale
of a partial interest in selected works that would allow the college to
continue to display the paintings for some of the time. The college
had extensive discussions with two institutions but was unable to work out an
acceptable transaction.

That left the college with no
alternative but to make the difficult decision to select a smaller number of
paintings to be sold outright with the proceeds from sale being transferred to
the college’s general endowment. After extensive debate, that decision
was unanimous.

Q.
That sounds to me like a board wrestling with a set of less than
ideal alternatives, and then ultimately pursuing the path that, in their
judgment, was least damaging to the overall well-being of the
institution. But to some in the art world, none of that
matters. In their view, it’s never okay for a museum to sell work
and use the proceeds for general endowment purposes. Those works,
according to this view, are “held
in the public trust” and therefore may not be sold. Was the
college aware of this point of view when it made its decision and, if so, what
impact did it have, if any, on its thinking?

A.
Randolph College is an educational institution, whose principal purpose is to
provide an undergraduate education to current and future students. The
college’s assets are held by it for that purpose. This principle applies
to all the assets of the college, whether in the form of real estate,
buildings, equipment, financial assets, books and educational materials,
individual works of art or artifacts, or collections of such items.
Unless an express condition has been imposed by a donor on a specific asset at
the time of the gift, the college is free to manage its assets in accordance
with its stated purposes.

The college owns its art
collection outright and has never taken any steps to limit its authority to
deal with individual items or the collection as a whole.

While it is surely true that
in 2007 some members of the board of trustees were aware of the position taken
by many in the art world that museum collections, at least those of accredited
museums, are held “in the public trust”, there was never a suggestion by anyone
on the board that such a concept applies to the Randolph College art
collection. The short answer to your question is “no, the public trust point of
view did not affect our thinking”. What the “public trust” concept may
mean in general, or to any other institution in particular, may be the subject
of debate, but that would be in a different forum.

Q.
The other argument (besides the
“public trust” argument) that the anti-deaccessionists like to make is that
selling art will discourage future donations. They say that, in the
future, people will be reluctant to donate work because they’ll be afraid the
school will turn around and sell it to pay the bills. What do you make of
that argument? Did that factor into the decision-making process at all?

A.
I cannot speak for any other institution, but in Randolph College’s experience
that has not been an issue. Since the announcement of the college’s
intention to sell four paintings, and the sale of one of them, the college has
continued to receive donations of both additional art as well as financial
contributions expressly for the purpose of acquiring art. I am not aware
of any decision by a potential donor to withhold a gift of art because of the
proposed sale of selected paintings.

I would also add that we did
not and do not intend to use sale proceeds “to pay the bills”. Our intent
is to use the proceeds to increase the size of the endowment so that it
continues as a permanent asset providing financial support for all the
College’s activities for the indefinite future.

The college’s art collection
has been built up by a sustained and deliberate process of acquiring
contemporary art by the college over a period of more than 100 years. It
has received gifts and bequests of art, but in general the acquisitions have
been made by the college, and we expect this to continue. One of its most
recent acquisitions was of an important piece by Betye Saar, Nevermore,
which was purchased earlier this year from the college’s 100th
Annual Exhibition of Contemporary Art: The Vision Endures. Thirteen
alumnae made donations towards that purchase.

Randolph College’s financial
support comes from people who believe in its academic mission, which includes
the use of its art collection as an educational asset, and in the case of
donations of art from those who wish to add to that collection. There is
no doubt that the decision to sell four paintings upset many people, including
alumnae and other supporters, and it was made very reluctantly. We
recognized that would be the case, but we believed that our fiduciary
obligation was to do all we could to enable Randolph College to survive and
thrive, and that if we did so we would continue to receive financial
support. We have every reason to think that judgment was and remains
correct.

Q. That was actually
going to be my next (and final) question: with the benefit of hindsight,
do you still feel it was the right decision? (It sounds like your answer
is clearly yes.) Would you have done anything differently? What
advice would you offer to a college or university facing a similar predicament
in the future?

A.
Yes, when the time came to make the decision, this was the right
decision. When we considered the challenges facing the college in 2006
and 2007, the need to put the college on a financially sustainable foundation,
the educational purpose of the college, the duties of the board of trustees in
overseeing the college’s affairs and, finally, the options available to us, we
did not have a better option. I would make the same decision.

In hindsight it is always
possible to see ways in which a matter could have been handled
differently. I wish that the fact that the college owns its art
collection directly and is not subject to any legal or other obligations
restricting it from selling the paintings and transferring the proceeds to its
endowment had been better understood by others who were not standing in our
shoes. Perhaps we could have done a better job of explaining that
important point, and also that our obligations to the college as an educational
institution take priority over other concerns.

Hindsight also requires us to
consider the effect of the financial crisis that started in 2008 on the value
of the college’s endowment. Though the endowment value performed
relatively well compared to some benchmarks, as was the case with other
colleges it suffered a severe decline. That decline reduces the amount of
the sustainable draw, and exacerbates the need to increase the overall value of
the endowment with the proceeds of sale.

What is my advice to other
colleges or universities?

·First, and at all times, focus on
the primary mission of the institution, and make decisions with that in
mind.

·When it comes to the management of
college assets of any kind, be very clear about ownership and control. It
is better to clarify that at the outset than have to try and explain it later
on.

·Before accepting proposals that,
even if attractive in other respects, could result in actual or perceived
restrictions on the college’s freedom to act and to manage its assets, ask all
the necessary questions.

·Do not let others try to set your
agenda, but if a decision is made to establish a program or subsidiary institution
that will restrict the use of assets, then make sure the issues are understood
by the governing body, the administration and, to the extent they are involved,
the faculty.

·Educational institutions of all
sizes, both public and private, are under increasing financial pressure.
Over the next several years they may have to examine more closely than before
which assets are really essential to their mission and which are
secondary. Tough choices may have to be made and not all constituencies
can be accommodated, so good preparation will be important.

Saturday, October 20, 2012

Recent posts by Sergio Muñoz Sarmiento and ARTINFO's Rachel Corbett remind me that I've been negligent in not mentioning the important changes to the New York consignment statute. You can see the changes here. The New York City Bar Association Art Law Committee has some good background here, and Nicholas O'Donnell has an excellent summary here. To my mind, the most significant change is the provision allowing the artist to recover his legal fees if his lawsuit is successful. That will have huge practical effects.

The ARCA blog is really the go to place for news on the theft. Just keep scrolling.

ARCA founder Noah Charney had a piece at ARTINFO maintaining that "there is a good chance that the art was stolen only in order to be
ransomed back to the victim ... or
their insurers."

The Daily Beast's Megan McArdle says "the big mystery is ... why thieves continue to steal the stuff" (since it's so hard to sell). She quotes retired FBI art theft agent Robert Wittman that "the general pattern is that the criminals who do these jobs, these
heists, are good thieves, but they're terrible businessmen. That's what
it comes down to." (Full interview with Wittman here.)

The New York Times reports "the theft was the latest alarm about museum security in Europe, now a prime hunting ground for art thieves," includes a slide show of some of the stolen works, and also has an op-ed by Anthony Amore, director of security at the Gardner Museum, who says that art thieves "are often opportunistic and almost always shortsighted." The Guardian's Edward Dolnick has a similar take: "what are the thieves thinking? Less than you would imagine."

And Crispin Sartwell speculates that the thieves "are art-rights extremists who are trying to free all the works of art that are imprisoned in museums. how can i help? let my paintings go. we need to bring the art back into the world and stop locking it up behind layers of bulletproof glass and impregnable marble."

Monday, October 15, 2012

I’m thrilled to have contributed to a new book on
issues involving academic museums, A Handbook for Academic Museums: Beyond
Exhibitions and Education. You can find more information about it here. My
chapter is on issues regarding donor intent in the Fisk-O’Keeffe litigation. I
hope to have more about the book in the coming days.

Friday, October 12, 2012

The Observer's Rozalia Jovanovic reports on a copyright infringement lawsuit by photographer Rodrigo Pereda against artist Ivan Navarro. Josh Baer expressed what's probably a pretty widespread view last week, writing that the suit "doesn’t seem to make much sense to me on the surface" because Pereda is suing "over the use of copyrighted photos of NAVARRO’s own sculpture." But there's no doubt that a photograph of a work of art is an independently copyrightable thing; the artist isn't automatically entitled to use it.

Navarro's team seems to be setting up a work-for-hire defense, but, as the Observer piece notes:

"'If the photographer was in fact the artist’s employee, ... that’s probably a work made for hire and the copyright
belongs to the sculptor,'" said Christopher Sprigman, a professor of
intellectual property law at the University of Virginia. But if the
photographer was an independent contractor and not an employee, Dr.
Sprigman said it’s not a work made for hire situation unless there’s an
agreement that says as much."